PMI stands for private mortgage insurance, and it protects the lender from loss should the borrower default on the mortgage loan, according to Bankrate. Lenders require PMI if the down payment on a mortgage does not exceed 20 percent of the appraisal value or the sale price of the property.
Private mortgage insurance is available from two types of lenders: private and government. The biggest government insurance underwriter is the Federal Housing Administration, or FHA. Fees for PMI vary depending on the down payment and loan amounts but typically vary between 0.3 and 1.15 percent, according to Bankrate.